You really can’t analyze the payments industry without considering the role of e-commerce and the impact of the world’s largest e-commerce monolith – Amazon.
Amazon’s Q2 financial results are in and they’re impressive by every standard including beating analysts’ expectations handily, maintaining growth momentum, and growing cash flow from its Amazon Web services (AWS) business.
While Amazon is currently trading at around $3,124 (Aug 3, 11:00 AM Pacific), there’s open talk of a $5,000 trajectory just over the horizon. Let’s check a closer look at these impressive numbers.
Amazon Q2 financial highlights
Here’s a quick snapshot of the company’s Q2 2020 financial highlights to start the conversation:
- Q2 revenue of $89 billion
- North America sales up 43% and international sales up 38.5% over the previous year
- Amazon Web Services with $11 billion in Q2 revenue, up 29%
- $71.4 billion in cash and $33.1 billion in debt compared to $41.5 billion in cash and 23.3 billion in debt in contrast to Q2 2019
- net income of $5.2 billion with an impressive $10.02 earnings per share versus estimates of $1.50
- Q3 net sales predictions of between $87 billion-$92 billion, representing growth of 24%-33% with even the low end of sales exceeding analysts’ expectations.
Yowza! Any other questions?
Other impressive business performance results
“This was another highly unusual quarter, and I couldn’t be more proud of and grateful to our employees around the globe,” said Jeff Bezos, Amazon founder and CEO. “As expected, we spent over $4 billion on incremental COVID-19-related costs in the quarter to help keep employees safe and deliver products to customers in this time of high demand—purchasing personal protective equipment, increasing cleaning of our facilities, following new safety process paths, adding new backup family care benefits, and paying a special thank you bonus of over $500 million to front-line employees and delivery partners.”
Industry analysts use a variety of measures to analyze Amazon’s success. Founder and CEO Jeff Bezos, the richest man in the world, has long confounded them by not focusing on quarter-by-quarter profits, instead, taking the long view and reinvesting profits for growth, sometimes at the expense of short-term results.
The other solid business metrics worth noting include:
- 1.1 million employees with 175,000 new jobs since March 2020 and 125,000 of these slated to become full-time positions
- third-party sales on Amazon’s marketplace grew even faster than its own sales as SMB’s sold 3.4 billion products in the past year
- $9 billion spent in new capital projects and $1 billion spent in India to digitally enable micro, small, and medium businesses
- increase grocery capacity by 160% and tripled its grocery pickup locations
- new AWS clients including HSBC Bank and Formula 1 racing, as well as numerous new cloud services and products
- advertising revenue of $4.22 billion, up 43% in Q2 despite COVID-19
- subscription services including Amazon Prime memberships generated revenue of $6.22 billion, up 29%.
Amazon had an estimated 112 million US Amazon Prime members by the end of 2019 compared to 85 million in June 2018 and these loyal online shoppers spend an average of $1,400 annually,
Any further questions?
What’s ahead for Amazon?
The Q2 sales and revenue moonshot and positive Q3 forecast led several leading analysts to revise their future share prices strongly upwards according to financial analyst Bill Maurer at SeekingAlpha.com.
These included Goldman Sachs’ Heath Terry ($4,200 vs $3,800 prior); Cowen ($4,000 from $3,700); and Morgan Stanley ($3,750 vs $3,450).
During the current coronavirus crisis and then in the future post-pandemic world, Amazon will continue its role as the standard leader in the growth of e-commerce. The digital payments world couldn’t be happier as Amazon continues to reach new heights.
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